Be Wary

Thu, Dec 8, 2011 - 4:51pm

It's been a crazy day. Sorry that it has taken me this long to update but the first chance I've had.

First of all, I hope that all of you saw this from last night's post. For simplicity's sake, here's a C&P:

"First, read this:

One of the things we failed to notice prior to the unexpected beatdown in gold in September was that lease rates had moved significantly into negative territory prior to the attack. One of the articles we referenced back then was this one, linked below:

Anyway, here's the point. At -0.5%, lease rates are again near the level they were when gold was savagely attacked last September. One could say that the current, European dollar funding shortage is to blame. Maybe it is and maybe this is just a temporary phenomenon that will not impact the short-term price of gold. However, maybe its a precursor of another big selloff. The banks on the other end of the lease can use the borrowed gold to flood the market with sell orders. I took a bit of grief for not accurately predicting and warning of the September massacre. It gold crashes again over the next few days, don't say you weren't warned this time."

As if on cue, the PMs were savagely beaten today. Gold is off about $50 from its intraday high. Silver is down about $1.50. Is this the next stage of the same, coordinated, central bank, negative lease rate selling like we saw in September? Apparently, I'm not the only one who thinks so:

Look, I know that I just gave you a rather optimistic forecast for December. That was based, however, on what we knew at the time and the current position of the charts. Listen to me now: BE VERY CAREFUL. If you are foolish enough to be trading leveraged, paper metal on the Comex, trying to make some Christmas fiat, BE VERY CAREFUL. Gold, in particular, is in a very precarious position.

You all know of the importance I place on 1705-1710. Well, now that level also corresponds with the lower trendline of the pennant from the September lows. IF 1705 gets taken out overnight or tomorrow (which appears highly likely), buyers will pull bids and gold will rapidly drop toward 1680. IF 1680 fails, gold could fall all the way to 1550. If you are long futures or even something like the UGL and gold falls $150, you're going to get your ass kicked. So, let me say this again for emphasis: BE VERY CAREFUL and watch the 1705 level VERY CLOSELY.

Silver is on pretty shaky ground, too. At this point, I can't imagine it not going to 31 and, if 31 fails, it's going to test the lower end of its range near 30. IF that happens and 30 fails, we may finally see the drop all the way to the long-term trendline that we discussed off and on for the past several months. A drop of this magnitude would take silver all of the way to $25. Again, BE VERY CAREFUL.

OK, onto some other important stuff.

One of the reasons I got behind schedule today is this:

I read this and thought...well, screw it, I'll call Jim myself. We finally connected a few hours ago and we spent a little over an hour discussing current events. Like Santa, Jim is very concerned that the MFing Global situation is going to cause a system-wide crash of epic proportions. This idea of "rehypothecation" MUST BE STOPPED! If it is allowed to continue, a precedent will have been set that enables creditor firms to raid and steal your assets.

Let me explain. Recall that the bankruptcy law changes of 2005 reordered the subordination of creditors. It used to be that bondholders were the most senior of creditors in a bankruptcy. Now, derivative holders are the most senior...senior even to bondholders! If there was ever a more devious, pro-WallSt law created, I'm not sure I've seen it. Anyway...if a firm comingles or "rehypothecates" its assets with clients assets and then uses these funds to buy CDS, the derivative (credit default swap) holder (counterparty) can lay claim to the brokerage or clearing firms assets if that firm declares bankruptcy. Not just the firm's assets but their clients' assets, as well. This is the justification that JPM is using for stealing the MFing Global clients' funds.

If this is allowed to stand, the next time a firm fails (think BoA or Wells or Citi or any bank, broker or mutual fund company), a company like JPM or whomever is the counterparty on the bankrupt organization's CDS, will have precedent to step in and keep (steal) client money to settle their claims. THIS IS OUTRAGEOUS!

I mentioned above that the conversations that Jim and I have are off the record. He did allow me this one quote, however: "If you have money invested anywhere, leave only the amount of money in the system that you are willing (or intend) to lose." Your ultimate risk is that you may wake up one day and find that your life savings have simply vanished.

Look, I could be all wrong about this. Maybe everything will be OK. Maybe this rehypothecation thing is no big deal at all. Please don't take my word for it and then act in haste. Do your own research. Draw your own conclusions. I'm just someone who has been given access to people and information that I never in a million years would have dreamt I'd have. I have a duty to pass along to you what I think. Consider this information but do your own homework, too.

Lastly, I must touch upon the Iran drone thing. We all heard last weekend Iran claimed to have shot down an unmanned, U.S. spy drone.

Then, earlier this week I read this:

I was incredulous. Could Iran really have been able to electronically "hijack" a U.S. spyplane? No way! Well, sure as shit, they did! Take a look at this:

First of all, for those who claim that debka is unreliable and full of shit...maybe not! I've always maintained that debka gets their info directly from sources within The Mossad. Therefore, the site must be read daily. Next and more importantly, the hijacking of a U.S. spy drone is extraordinarily bad news for the U.S. First, just the fact that it actually happened is bad enough. Then, the realization that U.S. military technology infrastructure can be so easily compromised is frightening. If you can hijack a drone, can you launch a missile? Lastly, I fear that this realization will force the U.S to retaliate, either directly or through the allowed action of Israel.

The point is...MENA war continues to get much closer to reality with each passing day and a war between the U.S., Israel and Iran would have serious, global implications.

We often talk about "when the shit hits the fan". Well guess what, between the euro crisis, rehypothecation and MENA war, the shit is hitting the fan right now. Whether or not it all grows into a massive, global shitstorm this week or this month, is irrelevant. It has started. We are in it right now and it's only going to get worse. Continue to prepare accordingly.


About the Author

turd [at] tfmetalsreport [dot] com ()


Dec 11, 2011 - 8:14am

@Economical Disaster US drone

Ofcourse he wouldn't send a US killer team team into Iran, thats an act of war (on top of the illegal surveillance). Same goes for blowing it up by exterior force.

You try coming in my backyard observing me, I'll shoot you.

Dec 11, 2011 - 12:16am

From the Financial TImes in London...

"The partnership between the Federal Reserve and European Central Bank to provide hundreds of billions of relatively low cost dollars for euro area banks should have relieved the pressure to come up with greenbacks. Yet gold market people say European commercial banks are being driven to lend gold for dollars at negative interest rates just to raise some extra cash for a few weeks. There’s not a lot of transparency about where the banks are getting the gold they are lending out, but it could be lent to them by either their national central banks, or by gold exchange traded funds."

So banks that are about to go to the wall and therefore will be unable to pay their debts are borrowing from GLD? I can see that ending well.

Dec 10, 2011 - 11:22pm

@ pheeseas

I'm not interested in seeing gory photos of dead humans

next time use a link and a "not safe for work" designator so people like me can steer clear

MonedasI Run Bartertown
Dec 10, 2011 - 1:18pm

Dittoes !

Leftist are sick and confused busy bodies.....who hurt people....then ask us to consider them the most noble amongst us ! It's a cheap, childish way for under-performers to feel good about themselves ! Until you have earned your keep in the free market with out using force will I respect you ! Until you have created employment and opportunity in the free market without using force for your brothers and sisters will I elect you ! If you serve your fellow man as a public servant or it with economy, respect and honour....and you shall have my respect and gratitude ! Semper fi ! Monedas 2011 Comedy Jihad Won't Blow Smoke Up Your Asses Here !

I Run Bartertown
Dec 10, 2011 - 12:36pm

Code for Monedas

Code? I don't know. I'm not Ragnar Redbeard.

I do know that leftists do overwhelmingly tend to be slack-jawed, lazy-eyed, and pimply, and just generally defective in some manner.

Maybe that's what it means.

MonedasI Run Bartertown
Dec 10, 2011 - 12:31pm

Clean skinned ?

Is that code ? I'm a Libertarian and I choose my own company....but in theory I would like to give everyone the presumption of innocence that they are capable of relating to me as Libertarian Ladies and Gentleman ! Of course, living off the taxes of another is not a good first impression....shall we say ! It takes away the presumption of innocence....the public servant must convince me that he is honourable serving his masters.....the producers of wealth for all ! That Mexican or Afro-American or loyal Muslim immigrant that makes my delicious Egg McMuffin is a producer of wealth and has my respect and gratitude ! Monedas 2011 Comedy Jihad Tough Task Master Talk !

I Run Bartertown
Dec 10, 2011 - 11:42am

Verily Monedas!

"Verily! Verily! A new nobility shall be born unto thee O America! - a breed of Terrible Commanders - of Grim Destroyers - a nobility unpurchasable with the minted tokens of moneychangers - a nobility of Valor, of Power and Might - a nobility honourable, clear-sighted, clean-skinned, UNCONQUERABLE."


Dec 10, 2011 - 11:25am

Yeah ! Yeah ! Yeah !

Conquered by a man who wants her babies and will defend them with his own life ! What a novel concept ? Not run off with coke hookers and let the state raise them with welfare carpet bagger bitches ! For our English friends: After the Civil War the South was descended upon by a locust swarm of David Axelrod look alike government agent cock suckers with brand new portfolios made of carpet material....tough and practical....woven on New England's sturdiest looms ! You'll find their off spring in every Federal building ! Monedas 2011 Comedy Jihad History Lessons ! PSA: They, like Bill Clinton and Janet Reno, like to go out from their Federal buildings and murder men and women and children and nursing babies.... whose only crime was eating too much brown rice and wanting to love their God.... their way in freedom ! Think of that the next time any fat assed, over paid, protected, more equal than thou government worker or entitlee gets lippy with you ! Spit in their eye !

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

MonedasI Run Bartertown
Dec 10, 2011 - 10:46am

Ya know, Beard Barber Town ?

That's a hell of a morning prayer ! Was Ragnar part of the Norwegian Resistance ? Raggy Redbeard.....not this morning dear, I have a head ache ? McVeigh and Sons, Glaziers : "Replace those old windows for new environmental friendly Solyndra double "pained" coated windows ! Made in the U.S.A. ! Waco, TX ! No child labor....our children are dead ! Volume discounts ! Monedas 2011 Jihad Battle Humour !

I Run Bartertown
Dec 10, 2011 - 10:33am


"She pines to be wooed and WON, she likes to feel that she has been mastered. conquered, taken possession of - that the man who has stormed her heart is in all respects, a MAN among men.

Even to be carried off by force is not repugnant to her feelings, if the 'bold bad man' is in other respects acceptable"

R. Redbeard

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 5/25

5/26 8:30 ET Chicago Fed
5/26 10:00 ET Consumer Confidence
5/27 2:00 ET Fed Beige Book
5/28 8:30 ET Q2 GDP 2nd guess
5/28 8:30 ET Durable Goods
5/29 8:30 ET Pers Inc and Cons Spend
5/29 8:30 ET Core Inflation
5/29 9:45 ET Chicago PMI

Key Economic Events Week of 5/18

5/18 2:00 ET Goon Bostic speech
5/19 8:30 ET Housing starts
5/19 10:00 ET CGP and Mnuchin US Senate
5/20 10:00 ET Goon Bullard speech
5/20 2:00 ET April FOMC minutes
5/21 8:30 ET Philly Fed
5/21 9:45 ET Markit flash PMIs for May
5/21 10:00 ET Goon Williams speech
5/21 1:00 ET Goon Chlamydia speech
5/21 2:30 ET Chief Goon Powell speech

Key Economic Events Week of 5/11

5/11 12:00 ET Goon Bostic speech
5/11 12:30 ET Goon Evans speech
5/12 8:30 ET CPI
5/12 9:00 ET Goon Kashnkari speech
5/12 10:00 ET Goon Quarles speech
5/12 10:00 ET Goon Harker speech
5/12 5:00 ET Goon Mester speech
5/13 8:30 ET PPI
5/13 9:00 ET Chief Goon Powell speech
5/14 8:30 ET Initial jobless claims and import prices
5/14 1:00 ET Another Goon Kashnkari speech
5/14 6:00 ET Goon Kaplan speech
5/15 8:30 ET Retail Sales and Empire State index
5/15 9:15 ET Cap Ute and Ind Prod
5/15 10:00 ET Business Inventories

Key Economic Events Week of 5/4

5/4 10:00 ET Factory Orders
5/5 8:30 ET US Trade Deficit
5/5 9:45 ET Markit Service PMI
5/5 10:00 ET ISM Sevrice PMI
5/6 8:15 ET ADP jobs report
5/7 8:30 ET Productivity
5/8 8:30 ET BLSBS
5/8 10:00 ET Wholesale Inventories

Key Economic Events Week of 4/27

4/28 8:30 ET Advance trade in goods
4/28 9:00 ET Case-Shiller home prices
4/29 8:30 ET Q1 GDP first guess
4/29 2:00 ET FOMC Fedlines
4/29 2:30 ET CGP presser
4/30 8:30 ET Pers Inc and Cons Spend
4/30 9:45 ET Chicago PMI
5/1 9:45 ET Markit Manu PMI
5/1 10:00 ET ISM Manu PMI

Key Economic Events Week of 4/20

4/20 8:30 ET Chicago Fed
4/21 10:00 ET Existing home sales
4/23 8:30 ET Weekly jobless claims
4/23 9:45 ET Markit flash PMIs
4/24 8:30 ET Durable Goods

Key Economic Events Week of 4/6

4/8 2:00 ET March FOMC minutes
4/9 8:30 ET Producer Price Index
4/10 8:30 ET Consumer Price Index

Key Economic Events Week of 3/30

3/31 9:45 ET Chicago PMI
4/1 8:15 ET ADP Employment
4/1 9:45 ET Markit manu PMI
4/1 10:00 ET ISM manu PMI
4/2 10:00 ET Factory Orders
4/3 8:30 ET BLSBS
4/3 9:45 ET Market service PMI
4/3 10:00 ET ISM service PMI

Key Economic Events Week of 3/23

3/24 9:45 ET Markit flash PMIs
3/25 8:30 ET Durable Goods
3/26 8:30 ET Weekly jobless claims
3/27 8:30 ET Personal Inc and Spending

Key Economic Events Week of 3/9

(as if these actually matter)
3/11 8:30 ET CPI
3/12 8:30 ET weekly jobless claims
3/12 8:30 ET PPI
3/13 8:30 ET Import Price Index

Recent Comments

by Hypnotized Housewife, 6 min 2 sec ago
by RickshawETF, 37 min 14 sec ago
by Island Teal, 39 min 28 sec ago
by GoldHermit, 48 min 59 sec ago
by billhilly, 49 min 26 sec ago

Forum Discussion